All posts in category Economics

IS-LM is not a useful model

I have to admit that I have rarely used the IS-LM model since I became interested in economics. Instead, I find the AD-AS model much more useful. Of course, this does not mean that there is a major theoretical flaw in the IS-LM model. Rather, I think that the inferences that economists make by looking […]

Indicators of A Good Monetary Policy

There has been a heated debate lately about whether inflation is transitory or not. I think I caught this discussion a little late, but for various reasons, it took me quite a while to finalize this post, and I see no reason not to share it now. Note that most of the post was written […]

Random thoughts on economics

I think most people understand the supply and demand less than we think. That’s because supply and demand are more confusing and complex than what is taught in mainstream EC101 lectures today. Maybe you don’t think so, but I do. Suppose we asked students who have already taken EC101&102: “Oil prices fell. For this reason, […]

There is no reason to worry – yet

The Fed announced the CPI for May: 0.6% is still at a fast pace. But I don’t think we should worry. The rates announced so far match Claudia Sahm’s predictions: If we look at the PCE index, inflation has started to made-up its dip in 2020, but this does not necessarily imply that tightening is […]